Lower price threshold for foreign buyers of properties – boon or bane?

PETALING JAYA: While one of Budget 2020’s allocations for the property sector is aimed at reducing the supply overhang in the country, not all property players think this will solve the problem.

To reduce supply overhang of condominiums and apartments amounting to RM8.3 billion in the second quarter of 2019, the government has announced that it will lower the threshold on high-rise property prices in urban areas for foreign ownership from RM1 million to RM600,000 in 2020.

After tabling the Budget in Parliament, Finance Ministry Lim explained that the move is only applicable to existing unsold units and does not cover new projects that are yet to be launched.

However, National House Buyers Association (HBA) secretary-general Datuk Chang Kim Loong cautioned that existing property owners in the secondary market may capitalise on this situation to increase the selling prices of their properties.



“As a result, property prices could see a sudden shock effect of high increase across the board that will not only result in locals being squeezed out of the housing market but increasing the risk of a property bubble as this sudden rapid rise in property prices caused by lowering the minimum price threshold is definitely not sustainable in the long run.”

Rahim & Co International CEO of real estate agency Siva Shanker believes the Malaysian market is driven by domestic consumption, where property buyers in are Malaysians.

“This (lowered threshold for foreign ownership) will open a bigger pool of properties for foreigners to choose from. It will help decrease the overhang, but the overhang problem will largely remain,” he told SunBiz.

PropertyGuru country manager Sheldon Fernandez opined that the move to reduce the foreign ownership threshold is an interim measure to address the ongoing residential overhang in the country.

“However, domestic sentiment must be balanced against the short-term benefit of reducing the oversupply, as external intervention is not an ideal solution,” he said.

SP Setia Bhd president & CEO Datuk Khor Chap Jen said the reduction of the foreign ownership threshold value for unsold stocks of condominiums and apartments located in city areas will help to reduce the overhang for these type of properties as developers can market these range of products to foreign buyers.

“We hope that the state authorities will follow suit on this criteria.”

Mah Sing founder & group managing director Tan Sri Leong Hoy Kum said there has been growing interest in Malaysian properties among foreign buyers, and the reduction in the price threshold will directly benefit the group.



“Lowering the threshold of high-rise property prices in urban areas will have a positive impact as foreign buyers are a blue-ocean pool of potential buyers which can reduce the overhang of properties in this price point.

“It is crucial that respective state governments will respond to this positively and revise their ceiling price accordingly,” he added.

Source: The Sun Daily





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